Formidable Company Collected the Following Information: Standard Costs Per Unit

question 7

Multiple Choice

Formidable Company collected the following information: Standard costs per unit:
Variable overhead 4 machine hours @ $6 per machine hour
Fixed overhead 4 machine hours @ $10 per machine hour
Actual output 20,000 units
Denominator (normal capacity) output 21,000 units
Actual machine hours 79,000 machine hours
Actual variable overhead cost $540,000
Actual fixed overhead cost $810,000
Using the two variance method, what is the total variance?

• A) $30,000 (U)
• B) $70,000 (U)
• C) $70,000 (F)
• D) $30,000 (F)

Understand the impact of operating costs on the total cost of ownership of a product.

Evaluate the useful life of products in terms of service hours and how it affects pricing.

Assess preventive maintenance costs and their impact on overall product value and pricing.

Understand the concept and significance of value-added and non-value-added time within the manufacturing process.

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Definitions:

Royalties

Payments made to the owner of certain types of intellectual property, rights, or assets for the use of said property by others.

Trademarks

A legal designation of exclusive use of a brand or product name, protecting it from use by others.

Books

Physical or digital records that keep track of financial transactions and accounts for a person or organization.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.